Dave Ramsey has warned Americans of a costly Medicare mistake that could lead to lifelong penalties.
The finance guru said it is a big healthcare decision that people need to understand – and it is important they make a timely move when they reach a certain age.
Medicare is health insurance for retirees over the age of 65, or those with a disability or certain diseases.
It comes in a few different parts. Part A covers hospital costs, while Part B covers expenses like doctor visits and outpatient care for $174.70 per month.
The Ramsey Show host said it is crucial Americans enroll in the program at the right time.
‘The rules, options and dates around Medicare are crazy! Especially enrollment. But it’s important to know this stuff,’ he wrote in a post on his website.
‘Seriously, understanding and getting enrollment right is super important because if you get it wrong, you could end up paying penalties the rest of your life.
‘Yeah, the stakes are that high!,’ he continued.
Dave Ramsey has warned that it is crucial Americans enroll in Medicare at the right time
Bestselling author Ramsey explains that there are six different enrollment periods for Medicare, but only three for those enrolling for the first time.
Americans who are already receiving Social Security benefits before they turn 65 will be enrolled in parts A and B automatically, he said.
For first-timers, the initial enrollment period is three months before the month of your 65th birthday and then the three months after it.
If you have special circumstances, such as living overseas, you may also be qualified for a special enrollment period.
If you miss these opportunities, there is still a chance to enroll for the first time during the so-called ‘General Enrollment Period’ which runs from January 1 to March 31.
However, Ramsey warns that using this option to enroll usually comes with a penalty.
This comes in the form of ‘higher premiums – and they last for the rest of your life,’ he wrote.
He pointed out that Americans can enroll in Medicare parts A and B through Social Security by going to the program’s website, by phone, or by visiting a local Social Security office.
To enroll in Part C, which is also called Medicare Advantage, or Part D, retirees will need to contact the insurance company offering he plan, Ramsey added.
It comes as the jump in cost for Medicare Part B is expected to outpace Social Security’s annual cost of living allowance uplift in 2025.
Medicare is health insurance for retirees over the age of 65, or those with a disability or certain diseases
There are six different enrollment periods for Medicare, but only three for those enrolling for the first time
Medicare comes in a few different parts, including Part A, which covers hospital costs and Part B, which covers medical insurance
Part B currently costs $174.70 a month, but this rate will rise by $10.30 to $185 per month next year, the Centers for Medicare and Medicaid Services (CMS) has said.
CMS attributes the increase both to rising program costs and greater anticipated usage by seniors.
This change means many retirees will have to allocate more of their monthly income to healthcare, potentially squeezing budgets further amidst rising living costs.
The Plan B cost increase of 5.9 percent is greater than annual inflation, which rose 3.2 percent in the year to October.
It is also a bigger rise than next year’s cost-of-living adjustment (COLA), which will be 2.5 percent.
‘When Part B premiums grow at a faster rate than COLA uplifts, [healthcare] costs consume a growing portion of monthly Social Security checks,’ independent Social Security and Medicare policy analyst Mary Johnson told USA Today.
However, the situation is not unusual. Medicare Part B premiums have outpaced COLA uplifts for years, leaving seniors increasingly out of pocket.
Part B premiums increased on average by 5.5 percent each year between 2005 and 2024, while COLAs averaged just 2.6 percent each year in the same period.
‘The disparity is caused in part because Medicare costs are not included in the consumer price index that’s currently used to calculate the COLA,’ Johnson explained.
Source: Finance guru Dave Ramsey warns Americans about a costly Medicare mistake to avoid
